Q My practice has a lot of Medicare and Medicaid receivables. I have been approached by a factoring company that wants me to assign my right to these receivables to them. In exchange, they will pay me a discounted amount for these receivables immediately. This would help me a great deal with my cash flow. Is this allowed?
A Federal statutes prohibit health-care providers from assigning their right to receive payment from the federal government. The primary intent behind this prohibition is to prevent factors from purchasing government accounts receivable (Medicare and Medicaid) at a discount and then collecting on the right of payment or submitting a claim for payment.
What you could do is use your accounts receivable as collateral. In other words, you may borrow money against your accounts receivable, but you should never assign the right to payment to your lender. There is generally no prohibition against the right to assign receivables due from non-government payors, but you should check into the statutes of your particular state to be certain.
Q I am getting involved in some business ventures concerning my practice. How do I find the right lawyer?
A Health-care law is a niche specialty. Many activities that are legal in other business settings are not legal in a health-care context. You must make sure the attorney you use practices health-care law. Ask your lawyer about his or her credentials. Find out if he or she is a member of the health law section of the state bar; whether he or she is a member of the American Health Lawyers Association; and whether he or she is a member of the American Bar Association’s health law section. If your state has certification for health lawyers, find out if the lawyer is certified in health law.
Q I have been approached by a marketing company to market my practice. They have agreed to take a percentage of the amount of revenue I generate from new referrals. As I have no way of knowing whether this company will actually increase my patient load, I think this is a great idea.
A Unfortunately, strategies that may make sense in the every-day business world do not always work in the health-care world. The proposed agreement that you have outlined would result in fee-splitting and violation of the Anti-Kickback Statute.
In order to avoid violating the law, you need to comply with the following:
- The agreement between you and the marketing company must be in writing and signed by each of you and be for a period of at least one year.
- The agreement must specify the services that the marketing company will provide.
- If the marketing company is to work on a periodic or part-time basis, the agreement must specifically state the marketing company’s schedule, the amount of time the marketing company will devote to your particular project, and the exact charge for such services.
- The aggregate compensation must be set in advance, must be consistent with fair market value, and must not take into account the volume or value of any referrals or business generated by the marketing company for which payment is made in whole or in part under Medicare.
- The services cannot involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law. s
Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in New York and Florida. She has formed numerous integrated practices throughout the country.
Because this column is being presented to you by an attorney, it would not be complete without a legal disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented. Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.